ACCC probe of Fuji Xerox’s contract terms welcomed

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the Australian Competition and Consumer Commission’s investigation into the contract terms of Fuji Xerox Australia.

The competition watchdog announced it would pursue the printing technology supplier in the Federal Court last week alleging nine of the company’s standard small business contracts contained 173 unfair contract terms.

The ACCC alleges that there are 31 different terms which are unfair, including automatic renewal terms, excessive exit fees and unilateral price increases.

Fuji Xerox Australia issued an immediate statement saying it would defend the action.

“FXA had been cooperating with the ACCC’s investigation and had proposed several contract changes to seek to address the ACCC’s concerns. In that context, FXA is disappointed that the ACCC has decided to commence proceedings, which FXA intends to defend,” Fuji Xerox Australia said.

“FXA is sending correspondence to all its customers about how this impacts them and next steps.”

Ombudsman says action is right move

But Carnell said she welcomed the move as her office had received a number of complaints from small business customers of Fuji Xerox as well as from customers of other printing equipment suppliers.

“My office has received a number of complaints from small businesses customers of Fuji Xerox and other companies in the printing industry more broadly,” Carnell said.

“The ACCC is currently not able to determine if a clause amounts to an unfair contract term. Instead, the regulator needs to seek a determination from the court.

“My office continues to recommend enhanced capabilities of regulators to determine if terms are unfair and for significant penalties and infringement notices to apply to breaches.”

Carnell said she maintains that unfair contract terms need to be illegal and that the penalties need to be large enough to act as an effective deterrent.

“By making unfair contract terms illegal, the Australian Competition and Consumer Commission (ACCC) would be able to penalise big businesses,” she said.

“Small businesses has been waiting for changes to level the playing field for too long.”

What the ACCC says

The ACCC says the terms have been used in contracts between Fuji Xerox Australia and its small business customers for the supply of printing goods and services and technical assistance since at least October 2018.

“We have received a number of complaints from small businesses alleging that some of the terms in Fuji’s contracts have caused them significant financial harm,” ACCC deputy chair Mick Keogh said.

“Some of the unilateral variation terms allow Fuji to modify contracts by creating new rights and obligations, including increasing prices, without notifying its customers and without giving them any corresponding right to negotiate or reject.

“The ACCC will argue that the unfair terms in these contracts cause a significant imbalance in the rights and obligations of Fuji and the small businesses they contract with.

“This court action by the ACCC should prompt all other traders in the printing support industry to review their standard form contracts and make any necessary changes to remove unfair contract terms.”

The ACCC is seeking declarations that the terms in the existing contracts between Fuji Xerox Australia and its small business customers are unfair and therefore void, and an injunction to prevent the company from relying on these terms in its current contracts or entering into future contracts that contain those terms.

The ACCC is also seeking an order for a corrective notice, a compliance program and costs.

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